The United States Department of Justice (DOJ) announced a Liberian national plead guilty to $23 million in COVID-19 relief fraud. This announcement comes a couple of weeks after the first COVID small business loan fraud sentencing was delivered in Rhode Island. In that case, David Staveley received a 56-month sentence in federal prison followed by three years of federal supervised release.
According to the DOJ, Steven Jalloul, a 43-year-old tax consultant from the Dallas area, admitted he defrauded lenders participating in the Paycheck Protection Program (PPP). Mr. Jalloul was first charged in September 2020 via a criminal complaint and indicted later that month. He pleaded guilty to a superseding information charging him with one count of engaging in monetary transactions using property derived from unlawful activity. He did so while he was waiting on yet another tax fraud case in which he was sentenced to six years in federal prison.
So, this wasn’t the first rodeo for Mr. Jalloul in defrauding the U.S. government. However, this time around he submitted around 170 falsified PPP loan applications to lenders seeking $23 million on behalf of more than 160 clients. The DOJ says he was filing these applications on behalf of his tax preparation business, Royalty Tax & Financial Services LLC.
The DOJ goes on to say Mr. Jalloul inflated the employee rosters of his clients along with monthly payroll expenses in order to increase the amount of PPP funds for which their businesses would be eligible. The DOJ reports he charged these clients a commission of 2 to 20 percent on the PPP loans they received.
Eventually, 97 false PPP loan applications were approved totaling more than $12 million in PPP money for his clients. And Mr. Jalloul received at least $972,114 in fees from his clients. If that wasn’t enough, the DOJ said Mr. Jalloul listed his ex-wife as Royalty Tax’s authorized representative. He did so without her consent as he was seeking an inflated PPP loan for his own business.
The Acting U.S. Attorney for the Northern District of Texas, Chad E. Meacham, said, “The Justice Department will prosecute anyone who attempts to exploit pandemic-era financial programs. There are countless businesses ravaged by COVID-19 that deserved this money; Mr. Jalloul did not.”
The Northern District of Texas office said Mr. Jalloul faces up to 10 years in prison for the PPP fraud. The sentencing date is still pending.
Meacham adds, “The Paycheck Protection Program was designed to help hardworking businesspeople keep their companies afloat during the pandemic – not to line the pockets of unscrupulous accountants.”
Beyond accountants, the DOJ has identified hundreds of fraudsters that are in the process of going through the justice system. And if the first announced cases are an indication of what is to come, these criminals will be facing years in federal prison.
Source: Small Business Trends